Maître Ombeline DEGREZE-PECHADE, Attorney at law, the Paris Bar (France)(email@example.com)
Maître Fernand WEELEN, Attorney at law, the Eindhoven Bar (Netherlands). For his kind contribution on Dutch law.
The principle of full compensation (réparation intégrale) is a fundamental principle of the law of civil liability (or tortious liability) and, by extension, of insurance law. Because of this principle, the obligation of “mitigation” borne by the victim, that is to say, the obligation that the victim would have to minimise his own loss or damage, is denied in French law, since such mitigation would be contrary to the principle of full compensation. Thus, it has been ruled by the Court of Cassation (Cour de cassation), in a decision dated 2 July 2014 (JurisData no: 13-17599), that the victim who had been unable to benefit from tax reductions, due to the breach of a duty to advise on the part of the product promoters-sellers and solicitors who had advised on the sale, was not required to mitigate his loss, in the interest of the party responsible for the initial fault.
The difficulty lies in the fact that this case precedent has constituted the position of the Court of Cassation for many years, whether it be a matter of assessing the extent of physical or bodily injury, or the material damage to the victim. The Court of Cassation has indeed regularly reiterated the position that ” the proper function of civil liability is to re-establish as exactly as possible the balance of things destroyed by the damage, and to re-place the victim, in the situation in which he would have been if the wrongful act had not taken place. “(Court of Cassation, 2nd Civil Chamber, 16 December 1970, no 69 -. 12. 617).
Going against the position of France’s highest court, other European courts have, for the most part, upheld the obligation requiring the victim to mitigate the consequences of their damage. Thus, in the United Kingdom, “the duty to mitigate” is an essential institution of the common law and imposes on the victim an obligation of action or conversely an obligation of inaction, regardless of the damage suffered, when such mitigation of loss is possible.
The burden of proof is on the party in breach as defendant, to demonstrate that the victim has failed in taking what would be considered as reasonable steps to mitigate his loss. The limit is based on an assessment similar to the classic comparison that may be made with the ordinary reasonable man, traditionally equated with “the good father of the family (bon père de famille)” in France. Indeed, the victim may not be blamed for not having taken the steps that the normally diligent man would have reasonably taken so as to minimise the consequences of his own loss.
The origin of this concept is rooted in several ancient case precedents (Harries v Edmonds 1845, 1 Car & Kir 686; Payzu Ltd v Saunders 1919, 2 KB 581; Brace v Calder 1895, 2 QB 253) according to which:
- The obligation of the claimant to mitigate his loss is a factual issue for which the burden of proof rests upon the defendant (Payzu v Saunders).
- A master of a ship, upon the failure of a charterer to provide him an appropriate cargo in accordance with the contract, should normally accept a cargo from other persons at the best price obtainable (Harries v Edmonds).
- The dissolution of a partnership of employers could be regarded in law, in respect of an employee, as a wrongful dismissal that could serve to justify the latter’s claiming damages to cover two years’ earnings. However the fact that he rejected the offer of continued employment under the same contract terms as before, was held to be unreasonable, so much so that only minimal compensatory damages were awarded to the employee (Brace v Calder).
Similarly, in the Netherlands, Articles 6:96 and 6:101 of the Civil Code are used to organise the regime of mitigation of one’s own loss by the victim.
Article 6:96 of the Civil Code provides that the following are deemed to be damages and losses for which the victim is entitled to be compensated:
- the reasonable costs that were predictable and / or could likely have served to prevent or limit the damage suffered by the victim as a result of the event that resulted in the exposure to liability;
- as well as the reasonable costs incurred in order to carry out an assessment of the damages and losses, and the liability; and
- the reasonable expenses incurred in order to find an amicable agreement.
Moreover, the victim has a general responsibility pursuant to the provisions of Article 6:101. To the extent possible, the victim is required to take steps to limit and prevent his material and immaterial damages and losses. The underlying principle is that it is reasonable to expect the victim to behave in a manner, such as to limit the extent of his damages and losses, because the victim can then expect to be reimbursed for these expenses. It is necessary and sufficient for their expenses to be reasonable and intended to limit the damages and losses. Thus, in light of the circumstances, it is necessary that the expenses incurred by the victim in order to limit his own damage and losses, be reasonable.
It is however not necessary for the damages or losses to have actually been prevented or to demonstrate that the amount of the expenses incurred was lower than the cost of the losses. It is also not necessary to demonstrate that the measures taken to mitigate the losses would also have been taken, had the event not in fact occurred.
Article 6:101 provides that where the damage or loss is caused among other factors, as the result of circumstances attributable to the victim, the obligation to provide compensation to the victim is diminished.
The losses are then distributed between the victim and the defendant, on the basis of an equitable distribution in relation to the causes that generated the damage. The factual circumstances have to be taken into account in determining the appropriate distribution of indemnification between the victim and the defendant. Thus, there must be a causal relationship between the event and the damage or loss on the one hand, and between a circumstance attributable to the victim and the damage or losses, on the other hand. Such is the case for the victim who has not behaved reasonably, as might be expected of a normally prudent and diligent person in the same circumstances, and who could be expected to undertake certain measures in order to mitigate the losses.
The general principle is thus that the victim, within certain limits, is obliged to take appropriate steps so as to mitigate his own losses. However, the law does not impose upon the victim, the need to completely modify the essential choices or decisions that he would usually have made in his life. The obligation to mitigate one’s loss is therefore very clearly stated, and even quite highly developed, in English law as well as in Dutch law. However, there are remedial means offered under French law that provide the ability to overcome this prohibition in principle.
On the one hand, the victim demonstrating a willingness to aggravate his own damage or loss results in a break in the causal link that initially gave rise to the injury. Indeed, if subsequent to the injury initially brought on through the fault of the defaulting party, the damage is compounded solely through the victim’s own wilfulness (action or inaction), then the intervention of the victim should be taken into account in assessing the final damages.
On the other hand, the Court of Cassation has long recognised the fault of the victim as a ground for, at least, partial exemption from liability. Thus, in matters of tortious liability (delictual civil liability), the Court of Cassation has recognised in the DERGUINI and LEMAIRE decisions rendered in a plenary session of the full court on 9 May 1984 (Bulletin civil/Civil Bulletin no 2 and no 3 page 104), that the tortfeasor who has committed a wrongful act which has caused an injury, is required to pay full compensation to the victim, and only a fault committed by the latter can exonerate him in part, when this fault has contributed to the production of the damage:
“Having regard to these findings, the Court of Appeal, which was not required to check whether the minor was capable of discerning the consequences of his act, has been able to estimate on the basis of Article 1382 of the French Civil Code that the victim had committed a fault that had contributed, along with that of Mr Y .., to the occurrence of the damage in a proportion that was determined within its sole discretion;”
A recent judgment handed down by the Court of Cassation on 9 November 2011 (Revue Dalloz 2011 no 2864 and Bulletin Civil/Civil Bulletin no 186) shows that this dual consideration of the fault of the victim and the breaking of the initial causal link allows for the recognition of a partial or total exemption of the tortfeasor from liability:
“However, in view of the fact that having noted that the company Gelied, which had been given a significant period of time to pay the rental debt in lieu of the company Catef in order to arrange sale of the business assets and which had not provided evidence demonstrating that its trade receivables were uncollectable from the beginning, had made the choice to refrain for more than six years from taking any initiative aimed at recovering its trade receivables, the court of appeal, which responded to the written submissions, had been able to infer therefrom that the loss originating from the loss of their collateral security had resulted for the creditor from his inertia and not from the late notification of the service of the termination of lease;”
Thus, France’s highest court decided to dismiss the claim for damages to compensate for the loss arising from the forfeiture of a collateral security (in this case, a pledge on the business), given the fact that the loss had resulted from the creditor having made the choice to refrain for more than six years from taking any initiative aimed at recovering his trade receivables.
The Court of Cassation finally held in this case that the loss to the creditor arising from the forfeiture of a collateral security had resulted from his own inertia. In this decision, it is noteworthy that the Court of Cassation, in order to avoid the issue of the absence of any measures by the creditor to mitigate his loss, rather relied on his refraining from taking a decision during six years, which the Court deemed to be the sole cause of his losses. By upholding both the fault of the victim and the causal link, altered by the fault of the victim, the Court of Cassation indirectly recognised the need for the victim to mitigate his own losses. However, it should be acknowledged that the Court of Cassation makes use of a complex path to arrive at this outcome.